Real Personal Consumption Data
Today’s personal income data release was interesting.
Overwhelming, everyone is reaching the conclusion that the economy is strengthening and that stronger consumer spending is a major factor behind this conclusion.
But today’s report shows that we now have three consecutive months of zero growth in real personal consumption expenditures( PCE ) — the single largest component of real GDP. The report shows that as of January the first quarter growth rate for real PCE is zero.
Just a warning to be careful of accepting the consensus view of a strengthening economy.
Hey, who you calling “everyone”? Real PCE started Q1 at just about the average for Q4 – inauspcious beginnings. And inventory will be a drag in Q1. The 2.1% median real GDP growth estimate for Q1 is looking pretty fragile.
By the way, chain store sales for February were far stronger (by ICSC’s count) than had been expected. Car sales stronger, too. So while we’ve had 3 flat months for real spending, it looks like month 4 will show growth.
another caveat: both december’s & january’s weather were much milder than normal, so the seasonal adjustment overcompensates…
Bears watching closely because Obama probably only needs a couple more months of decent economic news, and no huge economic or political discontinuity, to get a second term. For better or for worse, the GOP hasn’t found a candidate who can overcome fundamentals that now favor Obama (and which, btw, seemed unlikely to most pundits last summer). See http://www.tnr.com/article/politics/101258/president-obama-general-election-2012-chances-prospects What with gas prices climbing and no PCE growth, however, there’s still time for fortunes to change.
Once, a 6-month lag seemed to work between economic and political outcomes. More recently, 3 seems closer. So the skin of Obama’s teeth needs to endure a while longer.
kharris I agree but think the closer you get to election day the more radically different the news must be to change the vote outcome. Obama does not want either the Spring storyline (which includes a lot of quarter one reporting and updating) to be Economy Grinds to a Halt in 2012 or the Summer storyline to be New Recession Strikes. Either of these would indicate to me that Obama’s in for the fight of his life even if his opponent is, uh, less than an attractive, dynamic candidate.
doug short:
“Real” Disposable Income Per Capita: No Growth for 20 Months